This Budget reduces the 2014-15 deficit by approximately $20 billion compared with the projected result for the current year and by approximately $4 billion compared with the December 2013 mid-year forecasts. Although, a significant proportion of this is due to changes in underlying economic conditions.
In essence, the Government's strategy centres on expenditure savings in the areas of health service contributions, foreign aid, education loan programs, family and other welfare benefits. Coupled with the reintroduction of fuel excise indexation and a personal tax increase, the Budget savings dramatically reduce the forecasted deficits.
The Budget also makes room for redirected expenditure priorities in infrastructure and the establishment of a medical research future fund.
KPMG's Federal Budget Brief 2014 provides insights for Australian business.
- The different impacts of this new budgetary framework are starkly evident when comparing business models with dependencies linked to social or industry welfare programs as against those focused on infrastructure.
- The revenue projections make a strong case for tax reform.
- There will be growing anticipation for the release of the 2015 White Papers on Taxation and Federation Reform.